This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Government today issued a Gas Storage Licence for ENI’s proposed major new gas storage facility at the Deborah field, under the Southern North Sea near the Bacton terminal.

This licence is a significant step ahead of ENI’s work to establish whether there is commercial demand for the offshore field to be used for gas storage, and will pave the way for the company to seek further approvals for the facility.

Energy Minister Charles Hendry said:

“This is a potentially a vast and crucial development. Gas storage is a vital means of providing flexibility in the gas market at times of high demand, and helps ensure secure energy supplies.

“The Government has made it a priority to ensure we have secure energy supplies, now and in the future, as we do not consider our current gas storage capacity is adequate in a world where we would be increasingly reliant on imported gas. Our plans to legislate on gas security in the forthcoming Energy Security & Green Economy Bill will help underpin commercial demand for gas supply infrastructure - like gas storage and import facilities. The Government welcomes developments which show that investors are willing to respond to this urgent challenge.”

ENI Chief Operating Officer of Gas & Power Domenico Dispenza said:

“The Deborah gas storage facility will have a working capacity of 4.6 bcm, more than doubling the UK’s gas storage capacity, and enhancing security of supply for the UK and for North West Europe. ENI is pleased that the major regulatory requirements - the agreement for a lease from The Crown Estate and the Gas Storage Licence from DECC - are now in place.

This enables us to focus on our current exercise to establish commercial demand for the facility. All being well, ENI hopes to move towards a Final Investment Decision by Q1 2011, leading to first commercial operation in 2015.”

This is the first agreement for a large scale UK depleted offshore field to be used as a gas storage facility in 27 years.

Notes for editors

The Energy Act 2008 created a regulatory framework, in which the Crown Estate controls the exclusive rights to use ‘porous space’ in the rocks beneath the seabed for gas storage, while DECC operates a licensing system that allows it to be regulated for environmental and other purposes.

The Licence does not grant prior approval for building work, which must be scrutinised against financial, environmental and technical criteria.

The Crown Estate is making a separate announcement about the agreement for a gas storage lease with ENI for the Deborah field.

As North Sea oil and gas supplies decline, there is a greater need for gas import capacity and storage. The national need for additional gas supply infrastructure is outlined in the “Revised Draft Overarching National Policy Statement for Energy (EN-1)”, published by DECC for consultation on 18 October 2010.

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